• Ar
  • Es
Al Mayadeen English

Slogan

  • News
    • Politics
    • Economy
    • Sports
    • Arts&Culture
    • Health
    • Miscellaneous
    • Technology
    • Environment
  • Articles
    • Opinion
    • Analysis
    • Blog
    • Feature
  • Videos
  • Infographs
  • In Pictures
  • • LIVE
News
  • Politics
  • Economy
  • Sports
  • Arts&Culture
  • Health
  • Miscellaneous
  • Technology
  • Environment
Articles
  • Opinion
  • Analysis
  • Blog
  • Feature
Videos
Infographs
In Pictures
  1. Home
  2. News
  3. US & Canada
  4. Head of US Minneapolis CB: Fed must not cut rates now
US & Canada

Head of US Minneapolis CB: Fed must not cut rates now

  • By Al Mayadeen English
  • Source: Agencies
  • 4 Jan 20:37
  • 1 Shares

Head of the Central Bank of Minneapolis Neel Kashkari says that the US must be confident that inflation has peaked before stopping rate hikes.

  • dsad
    Image of the Federal Reserve. (Reuters)

In an essay published on Wednesday by The Wall Street Journal, the head of the central bank in Minneapolis, Neel Kashkari, said that interest rates in the US should be raised around 1% more to accomplish the Federal Reserve’s target to fight inflation.

"While I believe it is too soon to definitively declare that inflation has peaked, we are seeing increasing evidence that it may have," Kashkari said.

Read more: US recession 100% certain in 12 months, Bloomberg forecasts

According to the Consumer Price Index (CPI) measurement, inflation increased by 7.7% in a year until October of 2022, rising at its slowest rate in nine months after topping a forty-year high of 9.1% in a year until June of 2022.

The lowered inflation levels came following consecutive rate increases by the Federal Reserve last year, raising the rate by 4.25% between March and December of last year.

Read more: Almost $10 trillion in losses for US economy, GDP declining rapidly

Before these hikes, rates reached a high of 0.25% as the United States central bank cut them down to almost zero following the COVID-19 pandemic in 2020.

Despite the Fed's efforts, however, the inflation rate continues to be three times higher than the favored level of 2% per year.

"It is appropriate to continue interest rate hikes at least at the next few meetings until we are confident that inflation has peaked," Kashkari stated, in a reference to the Federal Open Market Committee (FOMC) meetings of the Federal Reserve that makes the decisions regarding the interest rates.

"The Fed must avoid cutting rates prematurely and causing inflation to spike again, as this would be a costly mistake."

Read more: US set for recession next year, economists predict

In case the inflation has actually peaked, economists expect the Fed to raise rates by only 0.25% during the coming FOMC meeting in February, unlike previous hikes of 0.75% decided between June and November of 2022. 

Kashkari warned that rates might go over 5.4%. However, this will depend on how effective are the attempts to lower inflation.

"In this stage, any indication of slow progress in lowering inflation will necessitate raising policy rates potentially significantly," he stressed, noting that the Fed would only consider cutting the rates if the inflation rate starts approaching 2%. 

Read more: US industries losing battle against their own currency - WSJ

  • US Central Bank
  • United States
  • US Federal Reserve
  • WSJ
  • US inflation
  • US interest rate hikes

Trending Now

All
Stock losses increase ahead of Friday inflation report.

US stock losses increase ahead of Friday inflation report

Most Read

A woman walks by a money exchange shop decorated with different countries currency banknotes at Central, a business district in Hong Kong, Aug. 6, 2019 (AP Photo/Kin Cheung)

New BRICS currency underway: State Duma Deputy Chairman

  • Europe
  • 30 Mar
hhh

UAE, KSA, India, South Korea secretly supplying missiles to Ukraine

  • Europe
  • 28 Mar
A view of the exterior view of the International Criminal Court in The Hague, Netherlands. (AP)

Iran wins ICJ motion against US over illegal seizure of assets

  • Europe
  • 30 Mar
China, Brazil announce de-dollarization of mutual trade

China, Brazil announce de-dollarization of mutual trade

  • Latin America
  • 30 Mar

Read this

All
An AI robot at the World Artificial Intelligence Conference in Shanghai in 2020 (Reuters)
US & Canada

Shut down AI or 'everyone on Earth will die', researcher warns

  • 1 Apr
Ben-Gvir
Palestine

Ex-Israeli police chief to Netanyahu: Ben-Gvir could launch coup

  • 1 Apr
ds
Europe

US nuke umbrella can't protect Kiev from 'powerful Russian fire': DPRK

  • 1 Apr
An image of the Colnbrook immigration removal center in the UK in 2004 (AP)
Europe

UK immigration detention detainee death, suicide attempts spark fear

  • 1 Apr
Al Mayadeen English

Al Mayadeen is an Arab Independent Media Satellite Channel.

All Rights Reserved

  • Privacy Policy
  • About Us
  • Contact Us
  • Authors
Android
iOS